Manufacturing Output Expected To Outpace U.S. Economy

Although many forecasters believe growth of the U.S. economy will slow for the rest of this year and into the early months of 2007 -- Merrill Lynch & Co., for example, foresees a deceleration to an annual rate of just 2% in the first quarter of next year -- U.S. manufacturing output promises to outpace the overall economy in 2006.

Manufacturing production is likely to increase a "robust" 4.6% this year, says the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. In contrast, the alliance expects inflation-adjusted GDP growth in the U.S. to be 3.3%, more than a full percentage point below its projected growth rate for manufacturing activity.

"Manufacturing is benefiting from faster economic growth abroad and continued moderately strong domestic demand," says Daniel J. Meckstroth, the alliance's chief economist. "The stronger international activity, coupled with a slightly lower dollar, helps increase exports and tightens-up product availability. Manufacturing capacity utilization is rising, vendor deliveries are slower and commodity prices continue to skyrocket."

In 2007, the overall economy is likely to slightly outpace manufacturing growth, however. The alliance foresees inflation-adjusted GDP growth of 2.7% and manufacturing production growth of 2.5%

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